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Evonik is expanding API production at this facility in Hanau, Germany.

Evonik Industries says it will invest $27 million in the first stage of a program to increase its capacity for producing active pharmaceutical ingredients (API) and advanced intermediates for drug-industry customers at its sites in Dossenheim and Hanau, Germany.

Evonik’s announcement follows similar moves on the part of other US and European contract manufacturing firms. They say they are increasing domestic supply of drug chemicals in response to sourcing insecurities, including an overdependence on supply from China that the spread of the new coronavirus has brought to light.

“The COVID-19 pandemic has amplified the focus of many pharmaceutical companies to have European-based manufacturing sites that can support the production of their life-saving drug products for reliable supply to regional healthcare markets,” Thomas Riermeier, senior vice president of Evonik’s health-care business, says in a statement.

The first stage of the expansion is expected to be completed next year, with further expansion scheduled for 2024. Evonik says the project will boost its ability to conduct complex chemical processes associated with oncology drugs, antivirals, and other specialized therapies.

The contract API sector, flush with capital after a decade of high profitability, has seen a steady stream of investment in recent years. According to industry consultant Roger Laforce, a push to make the European drug supply chain less dependent on China and India,—already underway—is likely to be accelerated by vulnerabilities in chemical and API supply that became clear during the pandemic.

Thermo Fisher Scientific, for example, is in the midst of a significant expansion of API manufacturing in the US, Europe, and elsewhere that it says is helping customers pivot to new vaccine and therapy projects within weeks.

Sanofi is in the process of spinning off six of its European API plants into a new company that it says will “help in balancing the industry’s heavy reliance on API sourced from the Asian region.”

In the US, AMRI says it is increasing production of hydroxychloroquine sulfate, a malaria drug that has been put forward as a possible treatment for COVID-19 symptoms, at its API facility in Rensselaer, New York.

And the drug company Gilead Sciences told investors recently that it is in talks with “leading chemical and pharmaceutical companies” regarding expanded manufacturing of remdesivir, which recently won an emergency use authorization in the US as a treatment for COVID-19.